Financial Aid Lags Rising College Costs

With high school graduation less than a month away, Angelina Eutimio is still looking for $7,000.

That’s how much money the 18-year-old from Dittmer needs to fill in the gap between her financial aid and the cost of a year at the University of Missouri-Columbia.

Eutimio plans to pursue a degree in education, with the eventual goal of becoming a high school principal. Maybe even a superintendent. She’s hoping to find a few more scholarships to help her get there. But in the end, she figures there’s a lot of borrowing in her future.

“Everyone worries about taking out loans,” Eutimio said. “I know it’s going to be hard to pay it all back, but I’ll make it work.”

Such is life for students faced with today’s higher education dynamic: The price of school rises every year; financial aid doesn’t keep pace.

To get a sense of how this plays out on college campuses, the St. Louis Post-Dispatch examined several nearby universities to see how students with the highest level of need are being affected.

The paper looked at the gap between financial aid and the cost of schooling for a freshman. Aid included all need-based grants and a part-time work-study job. The costs included tuition, books, housing, food, transportation and miscellaneous expenses. At most of the schools, that gap grew considerably over the last five years.

Consider the case of a freshman entering the University of Missouri-Columbia in 2006 who qualified for the maximum level of grant and work-study aid. That student would have needed to come up with another $7,270 through loans, scholarships or a second job. For a freshman enrolling this fall, that gap has grown to an estimated $12,724.

Among others, the gap at the University of Missouri-St. Louis has grown to $15,388, up from $13,232. And at Southern Illinois University Edwardsville, it has grown to $6,019, up from $2,361.

It’s a troubling trend in the eyes of college finance experts, who fear the cost of a degree may already be too high for some students. And there’s no reason to think the trend will reverse itself.

Even now, the government is talking about cutting Pell Grants ? a key funding tool for low-income students. And most states are slashing higher education spending as they grapple with budget woes.

“The trend is going to get worse,” said Mark Kantrowitz, financial aid expert and publisher of FinAid.org. “The gap this year is going to be growing faster than ever before.”

The cuts have been even more severe for schools like the Missouri University of Science and Technology in Rolla, where enrollment has been boosted in recent years because of a pair of federal aid programs aimed at attracting low-income students to math and science fields. Both programs were cut during recent federal belt-tightening, meaning a loss of nearly $10,000 for the neediest students pursuing degrees such as engineering.

Kantrowitz and others worry about the impact such cuts will have on students from families lacking substantial resources.

They see more students like Melisa Betts, 23, of St. Louis, who will graduate from UM-Columbia in December with a degree in architectural studies. She has no complaints about her choice of schools, but it’s not really where she wanted to go.

“My first choice was actually Texas, but that would have been way more expensive,” Betts said.

Rising costs are forcing students like Betts to alter their thinking and goals. Some will be forced to shift to second and third choices. Some may end up at two-year schools or skip college altogether.

“There are more students who will end up at two-year institutions, not because it’s the best fit for them, but because it’s all they can afford,” said Faith Sandler, executive director of the Scholarship Foundation of St. Louis.

It’s a marked change from the 1990s, when students could count on federal and state aid to offset a higher percentage of college costs. That was a time when low-income students could make it through college largely on the strength of a Pell Grant and state aid, said Terri Harfst, interim director of financial aid at Southern Illinois University Carbondale.

The college is one of the few in the region that has actually been able to narrow the gap between financial aid and the cost of college from 2006 to 2011. They have done it through institutional aid ? or tuition discounting for the neediest students.

Still, the impact of rising costs are felt throughout the student body. As costs have risen, so, too, has the amount of money that families with moderate incomes are expected to contribute to their kids’ schooling. A family with an income of $40,000 to $60,000, for example, might be asked to pitch in $6,000 a year.

“Most people are in the position where they don’t have that kind of liquidity,” Harfst said.

And that, invariably, means loans.

Jessica Cox, 27, isn’t exactly a traditional college student. With a 4-year-old daughter and a history that includes an unproductive stay at a local for-profit college, Cox has been forced to borrow heavily to stay on track as she graduated this month from UM-St. Louis with a degree in criminology.

The ink has yet to dry on her diploma ? and already she’s thinking about the prospects of repaying the $60,000 to $70,000 worth of loans she’ll take with her.

“Oh, yeah. It troubles me,” Cox said. “That’s like half a house.”

A report last year by the Project on Student Debt showed that 2009 graduates carried an average of 24,000 in debt, the highest level ever. Three years earlier, the same group estimated student debt at just over $21,000.

Even as students face the prospect of rising costs, schools are doing what they can to offset the financial hardships brought on by tough economic times.

Washington University and the University of Illinois at Urbana-Champaign are among some 60 schools nationally that have made pledges to reduce student debt with substantial institutional aid offerings to needy students.

St. Louis University has increased its institutional aid budget from $51 million to $77 million over the last five years, providing as much as $22,400 in need-based aid through its SLU Grant. The university has also established an emergency scholarship fund and an internal student loan program to help current students who find themselves with unexpected financial troubles ? a parent’s job loss, for example.

“For students to afford a SLU education, the institution has to be willing to support that,” said Cari Wickliffe, director of student financial services.

There has been a similar push at Mizzou in recent years, with the school’s financial aid budget increasing from $31.7 million in 2006 to an estimated $43.2 million next year. That fund includes some $2.7 million set aside from the recently approved tuition increase to help students with financial needs, said Jim Brooks, director of student financial aid at UM-Columbia.

Still, from 2006 to 2010, the percentage of students borrowing money increased from 46 percent to 52 percent.

But while no one in the financial aid community thinks students have it easy today, Brooks stops well short of proclaiming a crisis in Columbia.

“I’ve not had any Missouri residents say we are priced out of what they can afford,” Brooks said.

If not, it’s just a matter of time, some financial experts say.

Kevin Walker is chief executive officer at SimpleTuition, a Web-based planning site. He has been studying the financial trends on the nation’s campuses for years. He’s surprised that enrollment has been skyrocketing in spite of an ever-worsening financial equation.

“At some point, it’s got to be too expensive,” Walker said. “I keep thinking this is going to be the year that we reach the tipping point. We have to be close.”